In their escalating conflict with American regulators, cryptocurrency advocates now have a new weapon: Europe wants their business.
As U.S. regulators start enforcing decades-old rules for trading and banking in the cryptocurrency realm, industry executives are increasingly using the trans-Atlantic comparison to call for simpler regulations. As Congress is still far from creating a federal standard for digital money, President Joe Biden’s regulators are filling the gap.
In contrast, the European Union is getting ready to implement new legislation specifically designed for businesses that deal in digital assets. Many European leaders are starting to promote the EU as a friendly location for cryptocurrency enterprises to open their doors.
Stefan Berger, a conservative German member who oversaw the development of the EU’s forthcoming crypto regulations, declared that they will have the best framework in the world in which enterprises may thrive. Everything you need for a viable market will be available.
No American policymaker is in a position to make this claim since American politicians disagree on whether to support or oppose the expansion of cryptocurrency, and regulators are resolving the issue on their own. The failure of the digital asset exchange FTX only made things worse by exposing widespread industry mismanagement and bringing down Sam Bankman-Fried, the exchange’s former chief executive and once-important crypto player in Washington. By stating that the United States is lagging behind other nations in the absence of clearer laws, lobbyists and sympathetic lawmakers domestically are attempting to maintain pressure on Congress.
America’s standing as a worldwide financial center and an advocate for innovation is at risk. The success of the EU is giving industry allies in Congress new motivation to promote their agenda, despite the crypto business losing political power in recent months.
America’s standing as a worldwide financial center and an advocate for innovation is at risk. The success of the EU is giving industry allies in Congress new motivation to promote their agenda, despite the crypto business losing political power in recent months.
We are behind the European Union. The Swiss are ahead of us. Australia is ahead of us, according to Wyoming senator Cynthia Lummis, a supporter of Bitcoin and author of a comprehensive bill to regulate cryptocurrencies. “England is ahead of us. So, it is not limited to developing and third-world nations.”
Because U.S. industry regulation is based on a patchwork of state-level laws and licences operating alongside federal financial safeguards created for traditional banks, traditional stock trading, and commodity exchanges, it stands out from EU regulation.
Notwithstanding the contradictions, crypto has been thriving in the US system for years, thanks to cooperative state-level policies and minimal interference from Washington.
Federal officials, however, who have run out of tolerance with what they see to be gross violations of conventional financial norms on investments and loans, are starting to impose a broad crackdown on the sector.
According to Kristin Smith, CEO of the Washington-based Blockchain Association, “we’re sensing a crypto carpet-bombing moment, where they seem to be attempting to hurl whatever they can within their jurisdiction — or possibly surpassing their authority — and we believe that’s stupid.” We believe it harms American competitiveness.
With Facebook, now known as Meta, announcing their Libra digital currency in 2019, the EU suddenly became accessible to cryptocurrencies. The Europeans then created their new regulations, effectively shutting out the sector.
European officials effectively prevented the project from starting because they were concerned about big tech making money off of individual investors.
Before similar crypto goods could gain traction on the continent, that incident forced politicians to create sector-specific laws.
Stablecoins are a class of digital asset, like the now-defunct Libra, that are tied to a national currency or other well-established financial instrument. The Markets in Crypto-Assets law, or MiCA, was developed by EU officials and establishes rigorous regulations for stablecoins. Additionally, it establishes corporate governance guidelines, capital requirements, and investor protections for the bigger crypto market. Aides to US lawmakers were recently in Brussels to discuss the new law with EU officials.
According to Susan Friedman, international policy counsel at Ripple, a digital currency company that is waging a legal battle against an enforcement action brought by the U.S., Europe is clearly outpacing the U.S. in the establishment of comprehensive regulatory frameworks for the crypto asset industry. Securities and Exchange Commission: “Going forward, we firmly anticipate that Europe will develop into a natural hub for responsible participants.”
Certain European officials are worried that the new law won’t be enough to prevent another fiasco at a major cryptocurrency firm like FTX. They want to build more precautions on top.
MiCA is a good step in the right direction, but it is undoubtedly not flawless or complete, according to Ernest Urtasun, a Green lawmaker from Spain who worked on the rules’ drafting. To address the regulatory and supervisory problems they are currently facing, more effort needs to be done.
The crypto business may view some aspects of the EU regime as more permissive than the simple effort now in the United States to just implement the rules that exist, according to Mark Hays, a senior policy analyst at Americans for Financial Reform.
According to Hays, EU rules are exceptionally convoluted because of the conflict between the European Commission, the Council, and the parliament, and that’s an environment in which industry lobbyists thrive.
The pressure from the cryptocurrency business in the US is ineffective because Congress is unconcerned by the idea of Europe stealing market share. The EU, according to some leading crypto company players, is still not a welcoming location to do business.
Senate Banking Committee Sherrod Brown (D-Ohio), a sceptic of virtual currencies, said in an interview, Crypto, it’s not like it produces that many employment. Corporations constantly threaten to offshore when they try to manipulate the system.
The nearly five years of haste and wait the Europeans have begun during the drafting and implementation of their new law, according to Dante Disparte, chief strategy officer and head of global policy at stablecoin issuer Circle, would be preferable to the U.S. regulatory ambiguity.
Disparte speaks from personal experience. He was a key figure in the Facebook Libra project, whose development was halted by EU regulators.
You might not like the fact that the United States is engulfed in a constitutional crisis with fintech because it safeguards and maintains the role of the states as the nation’s primary hubs for innovation, he warned. It, however, is a strong feature rather than a bug.
